YOUR MONEY: Get well paid soon

Don't let a sudden serious illness rob you of your financial strength. Andrew Geldard surveys the sizable, tax-free cover on offer

It will never happen to you. Or will it? The possibility of being struck down by a life-threatening illness such as a stroke, heart attack or cancer during your working life is higher than you think.About 680,000 people each year suffer from these three conditions alone. However, sophisticated medical techniques have meant that the majority survive and make a full recovery. About 77 per cent of people aged 35-54 who have a heart attack will continue to live for at least another five years. And 65 per cent of women aged 20-40 diagnosed with cancer each year will survive for more than five years.

But how soon they can resume work is another matter - a serious illness may mean a considerable if not permanent period of incapacitation. People are 14 times more likely to be off work because of long-term illness than die prematurely.

Combine this situation with the knowledge that the employer has statutory rights to provide sick pay for only a limited time, together with the fact that benefit provided by the state is likely to amount to a fraction of what you were earning and you have the recipe for financial difficulties.

That is a situation which critical illness (CI) cover is designed to alleviate. It will pay a sizeable, tax-free lump sum on diagnoses of a specific life-threatening medical condition or if the policy-holder becomes disabled and unable to work again.

Unlike life assurance, which supports relatives after the policy-holder's death, CI cover helps the policy-holder. The cash sum provides comfort and reassurance during an uncertain time by enabling the policy-holder to honour financial commitments like the mortgage, pay for specialist medical treatment and equipment while supporting day-to-day needs.

Since its launch in 1986, CI cover has become more predominant and there are now more than 60 companies providing policies which cover, in some cases, more than 30 serious illnesses. Total number of policies are now near the one million mark - still only 2 per cent of the population.

The recent growth area of CI cover has been largely through policies sold as part of a mortgage package. According to Peter Robertson, assistant general manger of Standard Life, a mortgage represents a clear need for protection.

"One problem CI has as a stand-alone product is that many people adopt the attitude 'it won't happen to me' and cannot justify the premium going out of the bank account each month,' says Robertson. "When CI comes as part of a mortgage, they don't mind another small amount being added to the payment as they recognise its role in protecting their most important financial asset against unforeseen illness."

Other significant companies on the market include Legal & General, Swiss Life, Scottish Provident, and Norwich Union. All provide policies which give average cover of pounds 50,000-pounds 60,000 on diagnoses of such conditions as multiple sclerosis, kidney failure, heart disease and even CJD.

Current Legal & General premiums are among the best in the market. A 30-year-old man wanting pounds 50,000 comprehensive C1 cover for 25 years will pay a guaranteed premium of pounds 14.05 per month. Scottish Provident's rate is slightly higher at pounds 19.09.

While most critical illness policies cover more than 30 conditions, the vast majority of claims are usually for heart attacks, cancer or strokes. As a result, policies exist which provide CI protection for just these three major illnesses, such as Abbey Life's Living Assurance Select.

Bryan Fisher of IFA firm Berkeley Financial Planning says: "It's very much a case of choosing whether you want to have third party cover or pay that bit extra to be fully insured against most range of illnesses. Having a policy which only covers the main three illnesses is fine until another one strikes, which is something you can never predict."

While the sale of CI cover with mortgage continues to thrive, as a stand alone product it still has some way to go before becoming as popular a part of our financial planning as pensions and PEPs. The name "critical illness" does provoke negative connotations in many consumers who take health for granted and cannot contemplate the thought that a horrible illness could strike at some stage in their life. But just as you assess the risks of an equity investment going wrong, take time to look at the risk of a sudden serious medical condition playing havoc with your quality of lifen

Scottish Provident 0131 558 2740, Legal & General 0345 125626, Berkeley Financial Planning 01203 555240, Swiss Life 0345 228866.

News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
film
News
people
PROMOTED VIDEO
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
Sport
Louis van Gaal would have been impressed with Darren Fletcher’s performance against LA Galaxy during Manchester United’s 7-0 victory
football
Voices
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Sport
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
sport
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
life
Sport
Rhys Williams
commonwealth games
News
Isis fighters travel in a vehicle as they take part in a military parade along the streets of Syria's northern Raqqa province
i100
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Life and Style
fashionLatex dresses hit the catwalk to raise awareness for HIV and Aids
Travel
travel
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Risk Manager - Banking - London - £650

    £600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

    The benefits of being in Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Test Analyst - UAT - Credit Risk

    £280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

    Finding the names for America’s shame

    The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
    Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

    Screwing your way to the top?

    Good for Lana Del Rey for helping kill that myth, says Grace Dent
    Will the young Britons fighting in Syria be allowed to return home and resume their lives?

    Will Britons fighting in Syria be able to resume their lives?

    Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
    Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

    Beyoncé poses as Rosie the Riveter

    The wartime poster girl became the ultimate American symbol of female empowerment
    The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

    The quest to find the perfect pair of earphones

    Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears